Manufacturer’s Online Sales Mode Selection In A Dual-channel Supply Chain

With the rapid development of e-commerce,more and more manufacturers are using dual channels consisting of online channel and offline physical channel to sell products,in which online channels have two modes of resale and consignment.In the reselling mode,the manufacturer sells the products to the e-commerce platform where the ownership of the product is transferred to the e-commerce platform,and the e-commerce platform then sells the products to consumers and invests in sales efforts to provide consumers with services such as product display and shopping assistance.In the consignment mode,the manufacturer directly sells products to consumers through the e-commerce platform,and pays a commission to the e-commerce platform.Under this mode,the manufacturer always owns the ownership of the products and provides services to consumers.Therefore,manufacturer with offline physical channels are usually faced with the choice between the reselling mode and the consignment mode.The online sales effort makes the manufacturer’s sales mode selection strategies more complicated.At the same time,in a dual-channel environment online sales in different industries have different positive or negative demand spillover effects on offline physical sales.Furthermore,some manufacturer usually chooses different e-commerce platforms to sell products online.Therefore,this paper will study how the sales efforts,demand spillover effects and platform competition affect the manufacturer’s online sales mode selection strategies in a dual-channel supply chain where offline entities and online channels coexist.Specifically,(1)How does a manufacturer choose an online sales mode when considering sales efforts?(2)How does a manufacturer choose an online sales mode when considering sales efforts and demand spillover effects?(3)How do manufacturer choose an online sales mode when considering demand spillover effects and platform competition? In terms of these issues,this paper carries out research from the following three aspects.First,this part studies the online sales mode selection strategies of manufacturer considering the sales efforts of different entities.Based on the existing research on the selection of online reselling and consignment modes for manufacturer,this paper innovatively considers the situation where different entities of supply chain invest in online sales efforts under online sales modes,and studies the online sales mode selection strategies of manufacturer under a supply chain consisting of a manufacturer operating an offline physical channels and an e-commerce platform.We found that if the commission is small or large,manufacturer should choose online consignment mode and online reselling mode respectively.If the commission is moderate,the manufacturer will choose the online reselling mode or the online consignment mode,but it is affected by the sales effort sensitivity factor and the sales effort cost factor.The higher the sales effort sensitivity coefficient or the smaller the sales effort cost coefficient,the more the manufacturer prefers the online consignment mode.However,the smaller the sales effort sensitivity coefficient or the larger the sales effort cost coefficient,the more the manufacturer prefers the online reselling mode.In the extended research,it is found that as the difference in the sales cost of the manufacturer’s unit product between the online consignment mode and the reselling mode increases,or as the difference in the cost coefficient of the manufacturer’s sales effort relative to the e-commerce platform increases,the manufacturer will be more inclined choose an online reselling mode.Second,this part studies the manufacturer’s online sales mode selection strategies considering sales effort and spillover effects.Existing research have mostly considered the situation that online channels cannibalize the demand of offline physical channels,but in fact,online channel sales may also stimulate the demand of offline physical channels.Therefore,based on the first part and the existing research,the positive and negative spillover effects are innovatively introduced into the mode,and the selection of the manufacturer’s online reselling mode and online consignment mode when considering the spillover effects is studied.It is found that if the spillover effect is negative,if the commission is small(larger),the manufacturer should choose the online consignment mode(online reselling mode).Meanwhile,it is found that if the spillover effect is negative,the smaller the sales effort cost coefficient or the larger the sales effort cost sensitivity coefficient,the more manufacturer prefer the online consignment mode.If the spillover effect is positive,if the positive spillover effect is weak,the conclusion is similar to if the spillover effect is negative;if the positive spillover effect is strong,the manufacturer should choose the online consignment mode.At the same time,it is found that the manufacturer’s online sales mode selection strategies is regulated by the sales effort cost coefficient and the sales effort sensitivity coefficient.In the extended research,it is also shown that the greater the difference in online unit product sales costs between the consignment mode and reselling mode,or the greater the difference in the cost coefficient of the manufacturer’s sales effort relative to the e-commerce platform,the greater the manufacturer’s preference for online reselling mode,and the manufacturer’s online sales mode selection strategies is regulated by parameters such as commission,spillover effect,and sales effort sensitivity coefficient.Third,this part studies the manufacturer’s online sales mode selection strategies considering demand spillover effect and platform competition.Based on the two parts above,e-commerce platform competition is introduced into the mode where consumers will have free-riding behavior.Existing research mostly considers online channels to take services of offline physical channels,but this paper innovatively considers consumers’ online service free-riding behavior,and studies online sales mode selection for manufacturer considering demand spillover effect and free-riding behavior under a supply chain consisting a manufacturer with offline physical channels and competitive e-commerce platforms.We found that:(1)if there is no demand spillover effect,if the degree of free-riding behavior is not considered,and the competition intensity is small,as the commission increases,the manufacturer should choose the online dual consignment mode and dual reselling mode in turn;If it is relatively large and the sales effort cost coefficient is small,the manufacturer should choose the dual consignment mode or the hybrid mode,but as the commission increases,the manufacturer should choose the dual consignment mode and the hybrid mode in turn;If the competition intensity is high and the sales effort cost factor is large enough,the manufacturer will only choose the dual consignment mode or dual reselling mode.If there is demand spillover effect,the greater the degree of free-rider behavior,the more manufacturer prefer the online dual consignment mode,but it is also regulated by the competition intensity,commission and sales effort cost coefficient.(2)Considering demand spillover effect.The conclusion is similar to situation without considering demand spillover effect.The difference is that if the negative spillover effect is weak,the larger the negative spillover effect or the weaker the positive spillover effect,the manufacturer is more inclined to choose the dual reselling mode.In the extended research,it is also shown that as the difference between consignment sales and the online unit product sales cost under the reselling mode increases,or as the manufacturer’s sales effort cost coefficient difference increases relative to the e-commerce platform,the less likely the manufacturer choose the dual consignment mode,and under certain conditions,manufacturer only choose dual reselling or hybrid modes.